It is important for individuals to first seek to understand the advantages and disadvantages that are aligned to Capitalism and Socialism before delving in any meaningful debate. While Capitalism’s main concern is to advocate for private property ownership and freedom of individuals to produce and purchase at their benefit or detriment, Socialism on the other hand advocates for ownership of property by the State and also that the State can further do more with the property at their disposal than when the same property falls in the hands of an individual. This paper seeks to analyze the importance of Capitalism over Socialism from the perspective of business philosophy.
Difference between Capitalism and Socialism
According to Marx & Engels (1985), the difference between Capitalism and Socialism can summarily be outlined in the definitions of the two terms. As mentioned above, the two are formed from two different philosophical ideologies. In defining Capitalism, which in essence is an economic system which also combines an aspect of political alignment that is more concerned with companies, land, and factories which are privately owned and are mostly driven by the desire to create as much profit as possible for the benefit of the owners. Capitalism dictates that prices of goods as well as services do not remain constant, neither are they controlled. The fluctuation of the prices is based on the consumer preferences as well as availability of goods. It is supported by the law of supply and demand. A society of capitalist nature is characterized by the haves and the have nots, that is to say those who own wealth and power through factories, land, machine, and equipment against those who have none. Capitalism, as is widely known is also a politico-economic idea concerned with the rights of individuals. To further explain this concept, Capitalism acknowledges the importance of an individual’s ability and freedom to own their own lives. That is, a person is free to live his/her life as he pleases while avoiding to encroach on any other person’s space or to violate others’ rights.
Socialism just as Capitalism is an economic and political system. Its main concern is its advocacy for collective (State) ownership as well as administration of production and distribution of goods and services. What characterizes a Socialist society is the lack of private property ownership and the most obvious scenario is that people are more concerned with the welfare of the less fortunate of the society. Socialism ensures that everyone has the amount of money as everybody else. Those lucky to be rich are required to share their fortunes with the poor so that everyone falls under the same social class – “middle class”. A Socialist system of government ensures that power is concentrated to the State, with an infringement of freedom of individuals. According to Socialism, man is not an end to himself but through his own conviction should sacrifice what he has for all to enjoy and be equal.
Advantages and Disadvantages of Capitalism
In my opinion and with support from research and scholarly articles available, there are a number of advantages of Capitalism (Hayek, F.1979). First and foremost, the most important of them all is how an individual’s quest for economic freedom goes a long way to also benefit other members of the society. Unhampering by the State through its rules and regulations in regards to wealth makes Capitalism a source of wealth creation. In turn, there is a rise in the standard of living of individuals under this economic arrangement. Also, Capitalism is recognized for its ability to increase economic opportunities such as employment and production and ensures a non-ending flow of goods and services. Further, Capitalism supports a free market environment, which checks that there is no room for a person to create more wealth for himself than others but instead as he creates the wealth for himself, he also creates opportunities for others. To explain this, as the rich become richer, Capitalism also allows for the poor to become rich. Interestingly, Capitalism is known to take care of interests of all within a community including those whose ideals are not aligned to ideology, that is Capitalism. In as much as Capitalism to an extent will create social classes, these are not as evident as displayed by Socialism. This is because Capitalism is less authoritative as compared to Socialism. In a Capitalist arrangement, those who have access to wealth have power but without a dictation of how to spend the wealth or power.
The disadvantages attached to Capitalism include unemployment, poverty and high crime. In as much as these disadvantages tend to affect Capitalism, it is known universally that societies which have embraced Capitalism have grown in leaps and bounds especially the life improvement of its people such as by raising the standards of living whilst Socialist societies have faced severe economic declines as regards the welfare of its citizens.
Advantages and Disadvantages of Socialism
Theoretically, few advantages can be spoken about Socialism. First Socialism is driven by the desire for equality for all while supplying health as well as national retirement benefits to all its citizens. At close scrutiny, under Socialism factors such as absence of inflation, unemployment, disparity to wealth power and status. In actuality, the less fortunate of the society actually meet the most expensive of social benefits which in turn are substandard and extremely difficult to get.
Whilst Marx the father of Socialism believed strongly that Capitalism was bound to fail, his belief has been challenged as reality has shown that Socialism is what has turned out to be the greatest of fails in modern history. This is necessitated by the fact that Socialism allows the State to have a monopoly over the economic aspect of a country, providing just a surviving structure in terms of economic survival to its citizens, especially workers. Socialism actually promotes exploitation of a high magnitude since citizens cannot live as they would want to but more so their existence is only as a means of ends as regards what leaders of a nation think. (Hayek, F. 2013)
To summarize the two concepts of business philosophy, under Capitalism, citizens at individual level have the ability to own land and while at it exercise control over the same. Further, there is freedom of production industry. Under Capitalism, one is able to buy homes, vehicles, household goods such as computers, speed boats, furniture etc. Actually, there is freedom of purchase of goods or services that one feels the need to buy. Also, Capitalism allows individuals to choose the area that they find most comfortable to live in. On matters of jobs, it still provides the freedom to choose what job one can secure and work in without government interference. Business inventions are also free from government interference and can come with as many innovations for his/her business without fear of being stopped or reprimanded. The system allows individuals to have as many choices to life and living as possible. Socialism on the other hand is one concept that ‘strangles’ an individual as it does not offer the freedom that Capitalism does. It bars individuals from owning money, land or even participate in production (industry). Under Socialism, ownership of land, property, production and goods is a collective aspect. The fruits of the economy are shared equally amongst members of the society.
Conclusion
The world over, Capitalism has been proved to raise the standard of living of citizens of a nation unlike in a Socialist society where the control of the economy lies in the hands of the State. For instance, before the fall of the Berlin Wall, West Germany was under the Capitalist politico-economic system while the East was under Socialism. The citizens of East Germany lived in very poor states that they many times tried to cross over to West Germany so as to enjoy the freedom that came with Capitalism. Ironically, the erection of the Wall was a project of East Germany, but as many sought economic freedom, it did not take much time for the wall to come down and for freedom to be spread to the East. In my opinion, and to a great conclusion, Capitalism is the best philosophy regarding economic growth and business.